Manufacturing Index improves

March's ISM Manufacturing survey delivered better than expected results and this key data point continues to suggest that the economic recovery is gaining more momentum and a solid rebound in manufacturing is taking place than has been broadly recognized. The overall index improved to 59.6 (from 56.5 last month) which is the best reading since July 2004 (interestingly this was one month after the first Federal Reserve Board interest rate hike in the 2004-06 hike cycle). The most important data is supplied by New Orders which improved to 61.5 (59.5 previously), indicating that orders continue to grow rapidly. This new order figure will require greater production which in turn requires re-employment of labor. We are finally seeing the sort of rush to re-build inventories that we typically see when an economic recovery really takes hold. All in all this is a very positive data set and one that suggests that the manufacturing employment cycle is likely about to turn strongly positive.